Maintain long positions. The FKLI boosted its upward direction yesterday by jumping 32.50 pts to settle at 1,555.50 pts – claiming above the 50-day SMA line. The index started with a positive tone at 1,527 pts and then touched its day low of 1,522 pts before extending higher. It then rode on risk-on sentiment, climbing higher throughout the session and hitting the 1,556-pt day high just before close. This strong positive momentum was in line with our recent expectation that momentum will accelerate once the FKLI crosses the 50-day SMA line. With the latest long white candlestick, we expect the momentum to continue propeling the index towards its 1,570-pt resistance before reaching the 200-day SMA line. Meanwhile, if the bears choose to take profits, we think 1,527.50 pts will act as a major support. As long as the major support or trailing-stop level stays intact, we maintain our positive trading bias.

We recommend traders keep to their long positions initiated at 1,524 pts, or the close of 17 Aug. For risk management and profits protection, a trailing-stop threshold is introduced at 1,527.50 pts.

The immediate support is revised higher to 1,550 pts and followed by 1,527.50 pts, or 17 Aug’s high. The nearest resistance is marked at the 1,570-pt whole number and then the higher hurdle of 1,599.50 pts, ie 2 Jun’s high.

Source: RHB Securities Research - 25 Aug 2021